ch08 e commerce

8/2/2019 Ch08 E Commerce

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E-COMMERCEMANAGEMENT INFORMATION SYSTEM

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LEARNING OBJECTIVES

Define e-commerce and important e-

commerce terms.Understand the effect of e-commerce

on market efficiency.

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E-COMMERCE

E-commerce is the buying and selling of goods and servicesover public and private computer networks.

E-Commerce has become one of the biggest growth areas inrecent years. Almost everybody has engaged with buying andselling over the internet. This includes individual consumerspurchasing or trading online, through to retailers that haveextended their business provision to include a website and online

presence, reaching out to a global market. Poor choices of technology and processes will result in poorly

managed opportunities which could lose business, marketposition and profitability.

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UNDERSTANDTHESTRUCTUREANDAIMSOFBUSINESSORGANIZATIONS

Organizations:type e.g. private, public, voluntary,charitable business organizations

Stakeholders:identification of stakeholders;satisfying stakeholder objectives;

Business functions:key internal businessfunctions e.g. marketing, sales,accounting,administration; ManagementInformation Systems (MIS), operations

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UNDERSTANDTHEIMPACTOFE-COMMERCE

Consumer impact:empowered customers e.g.online sales, direct communication withcustomers,greater choice, lower prices, availability of newproducts; global markets; new marketing models;

on-line advertising

Business impact:global business and consumermarkets; issues e.g. challenge of newtechnology,security issues, impact and implications of dealing

with customers on-line, creating new distributionchannels, greater competition, challenge tomonopoly power, retraining of staff, loweroverheads, new selling chains; legislation 5


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E-COMMERCE MERCHANT COMPANIES

There are two types of merchant companies: those that sell directlyto consumers and those that sell to companies.

Each uses slightly different information systems in the course ofdoing business.

B2C, or business-to-consumer, e-commerce concerns salesbetween a supplier and a retail customer (the consumer).

A typical information system for B2C provides a Web-basedapplication or Web storefront by which customers enter and

manage their orders (i.e., Amazon.com, REI.com) The term B2B, or business-to-business, e-commerce refers to

sales between companies (raw materials suppliers use B2Bsystems to sell to manufacturers, manufacturers use B2B to sell todistributors, and distributors uses B2B systems to sell to retailers).

B2G, or business-to-government, refers to sales betweencompanies and government organizations.

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NONMERCHANT E-COMMERCE

The most common nonmerchant e-commerce companies areauctions and clearing houses.

E-commerce auctions match buyers and sellers by using an e-commerce version of a standard auction.

This e-commerce application enables the auction company to offergoods for sale and to support a competitive bidding process.

The best-known auction company is eBay, but many other auction

companies exist; many serve particular industries.

Clearinghouses provide goods and services at a stated price,and they arrange for the delivery of the goods but they nevertake title.

As a clearinghouse, Amazon matches the seller and the buyer

and then takes payment from the buyer and transfers thepayment to the seller, minus commission.

Other examples of clearinghouse are electronic exchangesthat match buyers and sellers; the business process is similar tothat of a stock exchange. 7


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WHY USE E-COMMERCE?

Reduce transaction cost

Speed the flow of goods and services

Improve level of customer service

Enable close coordination among manufacturers,suppliers, and customers

Reach worldwide markets

For example, when Cisco Systems placed itsprocurement operation on-line in 1998, thecompany saved $350 million

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BASIC COMPONENTSOFA SUCCESSFUL E-COMMERCE MODEL

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BEABLETODESIGNE-COMMERCESOLUTIONS

Objectives:business idea e.g. unique selling proposition,business-to-business opportunities,

Market research:purpose of research e.g. identifyinginformation sources

Target markets:market analysis e.g. size, characteristics,

dynamics, competitors, historical background, emergingtrends, market share, market segmentation

Key processes:technology requirements e.g. hardware,software, security, maintenance, backend systems; supplysources; distribution channels

e-Commerce payment systemse.g. electronic cheque,

PayPal, credit or debit cards; Security:key areas e.g. prevention of hacking, viruses,

identity theft,, strong passwords, alternative authenticationmethods

Legislation:relevant legislation eg Data Protection Act 1998,Computer Misuse Act 1990,

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BEABLETOPLANANE-COMMERCESTRATEGY

Customer expectations:raised expectations for aquick and efficient service e.g. timelyresponses tocustomer communications, quick delivery of the productor service, accurate information.

Strategy:general e.g. marketing, supply chain,

electronic payment Internet strategy:hosting e.g. internal, sub-contracted;

designing the website; maintaining 24/7access Marketing strategy:methods e.g. targeting market

segments and interest groups, developingelectronicweb-communities, promotion strategies to targetspecific market segments, search engine optimization,e-marketing software

Supply chain strategy:methods e.g. satisfyingcustomer demand, responsive supply chain, developingpartnership relationships with suppliers 11


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BASIC COMPONENTS IN ANE-COMMERCE WEBSITE

o Profiling and Personalizing

o Search Management

o Event Notification

o Electronic Payment Processeso Securing Electronic Payments

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PROFILINGAND PERSONALIZING

Profiling gathers data on you and yourwebsite behavior and choices User registration

Cookie files and tracking software User feedback

Profiling is used for Personalized (one-to-one) marketing

Authenticating identity Customer relationship management

Marketing planning

Website management13


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SEARCH MANAGEMENT

Search processes help customers find the specificproduct or service they want

E-commerce software packages often includea website search engine

A customized search engine may be acquired fromcompanies like Google or Requisite Technology

Searches are often on content or by parameters

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EVENT NOTIFICATION

Most e-commerce applications are event driven

Responds to such things as customers first websitevisit and payments

Monitors all e-commerce processes

Records all relevant events, including problem situations

Notifies all involved stakeholders

Works in conjunction with user-profiling software

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ELECTRONIC PAYMENT PROCESSES

Web Payment Processes

Shopping cart process

Credit card payment process

Debit and other more complex processes

Electronic Funds Transfer (EFT)

Major payment system in banking, retail

Variety of information technologies captureand process money and credit card transfers

Most point-of-sale terminals in retail storesare networked to bank EFT systems

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SECURING ELECTRONIC PAYMENTS

Network sniffers easily recognize credit cardformats

Encrypt data between customer and merchant

Encrypt data between customer and financial institution

Take sensitive information off-line

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ch08 e commerce

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